(a)You are an investment manager and you are trying to explain the importance of the ROIC to your client. The client has investments in the following industries: pharmaceuticals, software and retailing. Which industry of these three would benefit more from improving ROIC than from increasing growth? Explain.

(1.b) What are total returns to shareholders (TRS), and why is this measure important? How can Company A outperform Company B on all key value drivers (e.g., growth and ROIC) but still deliver lower TRS?

(1.c) Discuss the three generic sources of a company's growth, their relative importance for its growth, and the implications for a company's strategy.

Answer rating: 100% (QA)

1a Importance of ROIC in Different Industries Return on Invested Capital ROIC is a crucial metric for evaluating the efficiency and profitability of a companys capital investments It measures the retu... View the full answer